Freemark Abbey Winery

Based on the attached calculations, we would strongly advise Mr. Jaeger to leave the Riesling Grapes on the vines despite the approaching storm.

Our recommendation is mainly based on the expected value of the proposed alternative as opposed to the expected value yielded by the alternative of harvesting the grapes immediately before the approaching storm (see Appendix 1 & 2).

A relevant factor which leads to a variation of the expected value lays in the independent decision on behalf of Freemark Abbey as to whether to bottle the wine or sell it by bulk in case of the rainstorm hitting Nappa Valley, yet not leading to the development of the botrytis mold (see node 7), thus two probability trees were created in order to take this factor into account.

Nevertheless, regardless of the above-mentioned decision, the following graphics show that the expected value is higher in both “waiting-scenarios” when compared to the alternative of harvesting the Riesling grapes immediately despite the approaching storm.

Our calculations do not take intangible factors into account. Based on the assumption that producing two botrytised Rieslings in a short amount of time (3 years) will lead to a strengthened reputation of the winery, our recommendation of leaving the Riesling Grapes on the vines is reinforced as the upside potential grows.

With regards to a downside potential in terms of intangible factors, i.e. the damaging of the winery’s reputation by bottling a wine that was not up to standards, the risk can be mitigated by deciding beforehand to sell the product in bulk if the specific scenario was to take place.

Based on the attached calculations, we would strongly advise Mr. Jaeger to leave the Riesling Grapes on the vines despite the approaching storm.

Our recommendation is mainly based on the expected value of the proposed alternative as opposed to the expected value yielded by the alternative of harvesting the grapes immediately before the approaching storm (see Appendix 1 & 2).

A relevant factor which leads to a variation of the expected value lays in the independent decision on behalf of Freemark Abbey as to whether to bottle the wine or sell it by bulk in case of the rainstorm hitting Nappa Valley, yet not leading to the development of the botrytis mold (see node 7), thus two probability trees were created in order to take this factor into account.

Nevertheless, regardless of the above-mentioned